Message-ID: <20302075.1075856597675.JavaMail.evans@thyme> Date: Wed, 10 Jan 2001 09:02:00 -0800 (PST) From: webmaster@cera.com To: messages@cera.com Subject: A Colossal and Dangerous Failure - CERA Alert Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: webmaster@cera.com X-To: messages@cera.com X-cc: X-bcc: X-Folder: \Vincent_Kaminski_Jun2001_5\Notes Folders\Cera X-Origin: Kaminski-V X-FileName: vkamins.nsf Title: A Colossal and Dangerous Failure URL: http://www20.cera.com/eprofile?u=3D35&m=3D2185 Overview: WESTERN ENERGY=01*CALIFORNIA GOVERNOR STAYS THE COURSE California governor Gray Davis provided his strongest public statements to= =20 date regarding the state=01,s power crisis in his annual State of the State= =20 Address on January 8, 2001. Echoing many of his previous positions on what = he=20 perceives as a flawed and unfair California market structure, the governor= =20 labeled the state=01,s electricity market system a colossal and dangerous= =20 failure. Among other actions, he launched new initiatives valued at $1=20 billion to encourage conservation, provide financing and land to new=20 generators, grant authority to utilities to engage in a portfolio of=20 transactions to manage electricity costs, and increase regulatory scrutiny = of=20 existing market suppliers. The governor also called for a greater role for= =20 the state in overseeing and constructing new power plants. The governor acknowledged that the actions proposed are only some of the=20 steps necessary to put California on the road to recovery. Details regardin= g=20 sources of funding for the initiative are still forthcoming. Although he=20 stated that California=01,s investor-owned utilities must not be allowed to= go=20 bankrupt, no formal plan for ensuring their solvency was given. The financi= al=20 community continues to lack the assurance it requires to continue to provid= e=20 financial backing for Pacific Gas and Electric and Southern California=20 Edison. At this time the state legislature remains the body most likely to= =20 guarantee their solvency. The governor again criticized the Federal Energy Regulatory Commission for= =20 what he believes has been its failure to manage and restrain properly the= =20 wholesale market. Merchant plant generators were accused of gouging the=20 state, and it was suggested that these generators acted illegally in their= =20 operations, jeopardizing the reliability of the power grid. New, more sever= e=20 sanctions were promised for those caught withholding power or extracting wh= at=20 investigators find as unreasonable profits. A Los Angeles Times poll released the morning before the governor=01,s addr= ess=20 indicated that the majority of Californians still do not believe there is a= n=20 energy crisis. Although the 33 percent growth in the state=01,s economy ove= r the=20 past ten years has nearly outstripped the state=01,s and surrounding region= =01,s=20 supplies of power, the bulk of the governor=01,s statements continue to foc= us on=20 the culpability of power producers, rather than the serious supply shortfal= l. Though the governor introduced steps to fund and facilitate the constructio= n=20 of new generating plants, increased regulatory scrutiny and the threat of= =20 sanctions will exacerbate the concern already expressed by plant developers= =20 and the financial community that the investment climate in California is=20 excessively risky. **end** Follow above URL for complete report. ********************************************************* Come Shoot the Rapids with us at CERAWeek2001, "Shooting the Rapids:=20 Strategies and Risks for the Energy Future" in Houston, February 12-16,=20 2001! For more information and to register, please visit=20 http://www20.cera.com/ceraweek/ ********************************************************* E-mail Category: Alert CERA Knowledge Area(s): Western Energy, ********************************************************************** To make changes to your cera.com account go to: http://www20.cera.com/client/updateaccount Forgot your username and password? Go to: http://www20.cera.com/client/forgot This electronic message and attachments, if any, contain information from Cambridge Energy Research Associates, Inc. (CERA) which is confidential and may be privileged. Unauthorized disclosure, copying, distribution or use of the contents of this message or any attachments, in whole or in part, is strictly prohibited. Terms of Use: http://www20.cera.com/tos Questions/Comments: webmaster@cera.com Copyright 2000. Cambridge Energy Research Associates